BUDGET 2014: Politicians' pay freeze a last-minute measure

By
Peter Martin

A pay freeze for politicians and senior bureaucrats intended for Tuesday’s budget has all the hallmarks of an afterthought.

BUDGET 2014: Politicians' pay freeze a last-minute measure

"We have got to send a clear message to the electorate that whatever we are asking the electorate to contribute to the budget repair task we are going to contribute ourselves": Treasurer Joe Hockey. Photo: Andrew Meares

A last-minute request to freeze the pay of federal politicians and senior bureaucrats was only sent to the Remuneration Tribunal late on Friday.

But in a rapid turnaround that will allow the Treasurer to announce the pay freeze on budget night, the Tribunal has decided to accept the government's request.

While Treasurer Joe Hockey said on Sunday that the pay freeze will happen to help shore up the budget, Fairfax Media had learned that Employment Minister Eric Abetz did not write to the Remuneration Tribunal until the very end of the week requesting the freeze.

While the tribunal has a regularly scheduled meeting in Sydney on Monday, it was able to either turn down the request or ask for more time to consider it, which would have left the Treasurer unable to announce the pay freeze on budget night.

On Sunday Mr Hockey appeared uncertain about what had been asked of the tribunal and when.

He told Channel Nine that Prime Minister Tony Abbott would be writing to the head of the Remuneration Tribunal.

Asked why Mr Abbott had not done that already, he replied: “He may have done it by now. I haven't asked him about the exact logistics of it, but it is certainly happening now.”

Mr Hockey said he was sure the tribunal would accede to the PM’s request “in due course”.

“We have got to send a clear message to the electorate that, whatever we are asking the electorate to contribute to the budget repair task, we are going to contribute ourselves,” he said.

The tribunal is in the process of determining a wage increase due to take effect in July. The letter from Senator Abetz asks it to grant no increase in July, effectively freezing politicians’ salaries for a year.

In its decision, released around midday on Monday, the Remuneration Tribunal said "it has been evident that any wages movement in the APS [Australian Public Service] and federal public sector would be restrained" and that the government's submission argued "parliamentarians and Commonwealth office holders should lead by example" on salary increases.

"Taking into account these factors, especially the outlook for public sector remuneration, the Tribunal has decided to determine no annual adjustment to remuneration for offices in its jurisdiction from 1 July 2014," the statement said.

The last time politicians’ pay was frozen was in 2008. Then prime minister Kevin Rudd approached the tribunal for a one-year freeze and then a three-month extension during the lead-up to the global financial crisis. The tribunal agreed, but then awarded what appeared to be an extra large "catch-up" increase when the freeze ended.

Mr Hockey was quoted on the weekend saying this government’s request would have “a permanent impact”, indicating he believes the tribunal will not award catch-up pay rises this time.

A one-year freeze would cost a backbencher the estimated $3900 increase that would be due if the tribunal awarded a 2.4 per cent increase. It would cost the PM $10,000. Aggregated over the entire life of this parliament the saving would be relatively small, less than $2 million.

The savings on pay rises for senior public servants would amount to more.

The importance of including politicians is symbolic, indicating that they are prepared to share some of the pain expected for families who will be denied family tax benefits and patients needing medical care who will be denied free treatment from doctors if reports about the budget measures are correct.